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Chinese foreign trade dropped in July 2016

Chinese foreign trade in dollar terms dropped in July 2016, due to weakening of the Chinese currency and domestic economy. The new data are further evidence of the continued deadlock in this vital sector of the economy. During the last year, the exports of Asian countries has dwindled by 4.4% to 184.7 billion USD in July. Initial data announced in yuan IS pointing an increase in the index with 2.90% on an annual basis. This impressive difference reflects the strong devaluation of the yuan against the dollar in the past year. The imports even decreased for the 21st consecutive month and now has shrunk by 12.5% yoy to 132.4 billion USD, while analysts had expected a smaller decrease.

As a result, China’s trade surplus rose in July to its highest level in six months, reaching 52.3 billion USD compared to 48.1 billion USD in the previous month. The customs data is monitored with great interest and analysts evaluate the status of the second largest world economy. Foreign trade remains one of the pillars of Chinese gross domestic product, despite Beijing’s efforts to rebalance the economy.

The disappointing data reinforce the already pessimistic picture of the Chinese economy. The industry is still depressed by massive overproduction and overcapacity, but also the public and private debt continues to grow and becomes disturbing, while the promised structural reforms are treading in one place. Earlier this month it became clear that the official measure of business activity entered into a phase of contraction.

In the second quarter, Chinese economy expanded by 6.7%, which is slightly stronger than expected. The government efforts to change the model of economic growth of the country, encouraging the development of the service sector, new technologies and domestic consumption.

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